Tornado Alley (PROG)

[fuagf]

Yup, and more than Merkel are taking a hard line re any Greece renegotiation. Course there is always posturing,
yet Merkel and the others, i guess, have been broadly consistent in their 'austerity/responsibility' positions
and fair enough a deal is a deal. Yet in the end sometimes both bend a bit. It is still a worry, for sure.

Euro Countries Take Tough Line Toward Greece

By LIZ ALDERMANJAN. 5, 2015

PARIS — As a caustic election campaign in Greece revives fears that the country could leave the euro, European officials are
taking an increasingly hard line toward Athens, saying they want to keep Greece in the single currency, though not at any cost.
http://www.nytimes.com/2015/01/06/world/europe/greeces-relationship-with-eurozone-is-tested-by-election.html

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Yes, many Greeks are fed up with the pain they have taken, and with the fact so many of them have been voting out of fear.

Leftists Ahead in Last Polls Before Greek National Election

By THE ASSOCIATED PRESS

JAN. 24, 2015, 5:35 P.M. E.S.T.

ATHENS, Greece — Syriza, the radical left-wing party that has vowed to rewrite the terms of the country's international bailout and end harsh austerity measures, held the lead in the last polls released ahead of Sunday's national election.

The last nine polls published on Friday — the last day of campaigning — showed Syriza's lead over the ruling New Democracy conservatives trending upward. Syriza led by anywhere from 2.8 to 6.7 percentage points. Syriza has taken advantage of widespread discontent over an economy that has shrunk by nearly a quarter and record-high unemployment.

The centrist party, To Potami, and the extreme right-wing Golden Dawn party were locked in a tight race for third place, according to the polls.

But the polls also indicated that around 10 percent of the nearly 10 million voters remain undecided.

There was no campaigning Saturday, a traditional "day of reflection" ahead of every election.

Syriza has alarmed international markets by calling for massive debt forgiveness and rewriting bailout deals with Greece's international creditors.

In the last national election in June 2012, many saw a Syriza victory as a precursor to a possible Greek exit from the eurozone, the 19 nations that now share the euro currency.

Now, Greece's European partners are less exposed to fallout from a Greek financial collapse. The eurozone has a bailout fund and the European Central Bank has committed to buy the bonds of troubled countries, if needed.

Syriza has tried to play up its mainstream, Europe-friendly aspects. But such efforts have been undermined by erratic bombshells from some Syriza officials — one candidate suggested printing euros if push comes to shove and another, touted by many media as Greece's next foreign minister, said the suspended bailout assessment should not be completed and that Greece did not need a 7.2-billion-euro ($8.1 billion) loan tranche.

Still, Greece's next government faces an enormous to-do list. It must consolidate reforms, keep running balanced budgets, strengthen weak growth after a six-year recession, conclude the frozen bailout assessment talks to secure the above-mentioned loan tranche and negotiate further relief for its bloated, 320-billion-euro ($359-billion) debt.

Creditors insist Athens must honor its bailout commitments if it is to receive continued support. If things go wrong, Greece could again face default — despite its 240-billion-euro ($269 billion) bailout and years of belt-tightening — and find its eurozone membership untenable.

According to some surveys, many voters believe that a Syriza government will not fulfill its campaign promises to play tough with the creditors, but are nonetheless voting for the party. These voters are in a mood to punish the current conservative-socialist coalition government for the hardships they believe have been unnecessarily inflicted on them, such as deep wage and pension cuts coupled with tax hikes.

http://www.nytimes.com/aponline/2015/01/24/world/europe/ap-eu-greece-election.html

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Then, grimace grin, i got a 'feeling it would be nice to look back a bit' Krugman
bug. One on Paul Krugman's position on the IMF Greece bailout in 2012.

Greece

February 21, 2012 8:18 am

We must do something. This is something. Therefore we must do it.

Yes, Minister .. http://www.jonathanlynn.com/tv/yes_minister_series/yes_minister_episode_quotes.htm .

What can I say? As Felix Salmon says .. http://blogs.reuters.com/felix-salmon/2012/02/21/the-improbable-greece-plan/ , this really isn’t credible. The problem with all previous rounds here has been that austerity policies depress the economy to such an extent that it wipes out most of the topline fiscal gains: revenue fall, so does GDP, so the projected debt/GDP ratio gets, if anything, worse.

Now we have another round of austerity — which is assumed not to do too much damage to growth. The triumph of hope over experience.

OK, nobody here is an idiot (although see my next post). What’s happening is that nobody is prepared to take the plunge into either of the paths that might eventually lead out of this: sustained aid (not loans) to Greece, or departure from the euro, leading eventually to higher competitiveness and faster growth. Both options would be politically catastrophic, which means that they can’t be taken until there is literally no alternative.

So Greece will be strung along some more.

http://krugman.blogs.nytimes.com/2012/02/21/greece/

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Hmm.

The Plan for Greece

May 18, 2012 2:15 pm May 18, 2012 2:15 pm

As we contemplate the Greek debacle, it’s worth looking at what was supposed to happen even if voters went along with the program. Here, from the IMF World Economic Outlook database, are projections for debt and unemployment under the program that’s now collapsing; and since unemployment has already spiked well above the forecast, we know that this was way overoptimistic. Anyway, this is what “responsible” policy is supposed to deliver:



Pain without end, amen.

http://krugman.blogs.nytimes.com/2012/05/18/the-plan-for-greece/

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Goldbugs, Greece, and Affinity Fraud

February 18, 2013 4:26 pm

Joe Weisenthal .. http://www.businessinsider.com/why-barrons-ran-that-ridiculous-cover-story-on-obama-turning-america-into-greece-2013-2 .. tries to understand why Barron’s, which he describes as a “quiet financial newspaper”, has a hysterical cover story about Obama turning America into Greece, Greece I tell you. So you might want to note that they’ve done this before. I don’t regularly read Barron’s or even notice what they’re saying, but I did note their frantic calls for a rise in interest rates .. http://krugman.blogs.nytimes.com/2009/10/19/gold-bug-variations/ .. back in October 2009, that’s right, 2009 — because inflation! confidence!

The truth is that Barron’s isn’t that different from the WSJ editorial page, which has also been warning about inflation and soaring interest rates for four years or more, and never seems daunted by being wrong again and again. Nor do readers seem to be put off.

Weisenthal basically puts it down to a marketing ploy; he notes that

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there’s a very wide overlap between investment newsletter services, and cranky, anti-debt, armageddonism. It’s part of the pitch.
--

and he adds that

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People always want to be told a story. And the doom story tends to have appeal among the older, conservative readers of these publications.
--

I’ve made much the same point, more offensively: I think of it as a form of affinity fraud .. http://krugman.blogs.nytimes.com/2013/01/18/fiscal-affinity-fraud/ , in which these publications (and various web sites too) reach out to readers by appealing to their shared hatred of snooty intellectuals who probably want to take all their money and give it to the 47 percent; since such people also tend to favor monetary and fiscal flexibility, there you have it.

The remarkable thing is that there seems to be no penalty at all for being wrong, consistently and repeatedly. Being their kind of guy is all that matters, even if it leads to terrible investment returns

http://krugman.blogs.nytimes.com/2013/02/18/goldbugs-greece-and-affinity-fraud/

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lol, Paul must be a bit sick of talking about Greece as the Feb 18, 2013 up there is the
most recent of a Greece search. Fair enough, too. His on the European situation now.

The European Scene

January 19, 2015 7:59 pm January 19, 2015 7:59 pm



This is the week we’re supposed to hear the ECB’s plan for monetary expansion; the German media are already howling .. http://www.ft.com/intl/cms/s/0/a4c15eb4-9fd3-11e4-aa89-00144feab7de.html#axzz3PFlWe0au , with Bild warning that Draghi’s expected actions will reduce the pressure for reform in “crisis-hit countries such as Spain, Greece, Italy, or France.” Above are European long-term interest rates as of close of business yesterday.

So, first of all, look at “crisis-hit” France; investors are so worried about France that they won’t hold its bonds unless offered, um, 0.64 percent, the lowest rate in history. But never mind — everyone knows that the French must be in crisis, because they still believe in social insurance, and besides, they’re French.

Notice also that crisis-hit Spain is now paying a lower interest rate than Britain. It’s surely a higher interest rate in real terms, because Spain faces the prospect of years of deflation. But this should — but won’t — put an end to all the talk about how low British rates are the reward for austerity, and so on.

More generally, those very low rates reflect market expectations that (a) the European economy will remain very weak and (b) that the ECB will continue to fall far short of its inflation target. German 5-year bonds are yielding minus 0.05 percent; index bonds of the same maturity are yielding -0.44 percent. So the market is saying both that there are very few good investment opportunities out there — few enough that paying the German government to protect the real value of your wealth is a good move — and that inflation over the next five years will be around 0.4 percent, not the target of 2 percent.

Will the QE policy turn this around? Unless it’s shockingly larger and more aggressive than expected, it’s hard to see how. Unconventional monetary policy works, if it does, largely by changing expectations; but the markets know this is coming, and are notably unimpressed.

Oh, and the markets don’t believe that the US is immune to these ills. Market expectations of inflation, as embodied in the 5-year break-even .. http://research.stlouisfed.org/fred2/series/T5YIE , have fallen off a cliff — it’s a bigger decline than the one that preceded the beginning of QE2 in 2010. Fed officials seem weirdly complacent about this, and about the risk that we, too, could find ourselves in a low-inflation trap.

Worrying times.

http://krugman.blogs.nytimes.com/2015/01/19/the-european-scene/

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He feels since broad policy was all wrong that it's hard to apportion blame.

Euroblunders

January 21, 2015 8:43 pm January 21, 2015 8:43 pm

The contrast between the mood in the US and in Europe is amazing. Obama wasn’t exactly able to claim morning in America in this week’s SOTU, but he was able to talk about success and moving forward. Meanwhile Mario Draghi is doing what he can and should, but I don’t know anyone who really believes that it will be enough.

So why the difference? Are the forces of secular stagnation stronger in Europe? Was it fiscal austerity? Was it wrong-headed monetary policy? As far as I can tell, the answer from the data is yes. That is, there are multiple possible culprits for Europe’s deflationary trap, and it’s hard to assign responsibility.

.. more with a couple of graphs .. http://krugman.blogs.nytimes.com/2015/01/21/euroblunders/

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Paul's last at the moment.

How Super Was Mario? (Wonkish)

Jan 22 9:28 pm Jan 22 9:28 pm 85

Mario Draghi pulled off a political triumph on QE, coming in with a program that is bigger and more open-ended than anyone expected. The goal was to jolt expectations, to convince markets that there has been a fundamental shift toward aggressiveness. And markets certainly moved in the right direction. But how much was achieved? Inquiring minds want to know — or at least I do. So I’ve done some back-of-the-envelope calculations on the question of how much Draghi managed to move inflation expectations.

.. more .. http://krugman.blogs.nytimes.com/2015/01/22/how-super-was-mario-wonkish/

Agree totally Greece will not go it alone. Not yet, anyway. :)

Hmm, porridge must be just about ready. LOL